Finance at Auto Services Perth Ltd.

What is Hire Purchase (HP)?

Hire Purchase is a way to finance buying a new or used car. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright.

What are the features of HP?

You’ll be able to drive away a car that you may not have managed to buy outright.

Unlike a PCP or PCH contract, you won't need to estimate your mileage at the start of your Hire Purchase agreement, so you'll avoid excess mileage charges.

Once you’ve made your final monthly payment, including the option to purchase fee, you'll have full ownership of the car.

What should you consider when opting for HP?

Monthly payments may be higher than some other finance options, such as PCP, as you're paying off the full value of the car.

You won’t be able to sell the car without settling the finance.

You won’t own the car until you have made all of your repayments.

You’ll need to keep the car properly insured, maintained and in your possession until the full value is paid off.

Can I settle my HP agreement early?

The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allows you to do just that. If you have got through two-thirds of the way through your finance agreement, the options to end the finance agreement early open up.

For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car early.

Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car back or you have a second option. Through a PCP agreement, you can take full ownership of the car by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.

What is Finance Leasing?

Vehicle leasing offers potential advantages to both buyers and sellers. For the buyer, lease payments will usually be lower than payments on a car loan would be. Any sales tax is due only on each monthly payment, rather than immediately on the entire purchase price as in the case of a loan. Some consumers may prefer leasing as it allows them to simply return a car and select a new model when the lease expires, allowing a consumer to drive a new vehicle every few years without the responsibility of selling the old vehicle, or possible repair costs after expiry of the manufacturer's warranty.

What is Contract Hire?

Contract Hire (CH) or Personal Contract Hire (PCH) is a type of agreement which involves renting a vehicle for an agreed period of time for a fixed monthly cost. The rentals would normally be subject to VAT some of which may be reclaimable for a business user. Contract Hire can also allow for servicing and maintenance costs to be included for the user. You simply "Hire" the vehicle for a specified time and return to the contract hire company at the end of the agreement.

Vehicle condition and excess mileage costs may apply.